The Zimbabwean unit of the world’s second largest platinum producer Implats will spend $690 million (R7.4 billion) to upgrade its base metals refinery, the chief executive officer said on Wednesday.
“It will be build in two stages. The first stage will cost $190 million … we expect stage two will cost $500 million,” Alex Mhembere, the chief executive of Zimplats told an analyst briefing in Harare.
Zimplats is 87 percent owned by Implats
In a quarterly performance described by the company as “satisfactory”, platinum miner Zimplats increased its ore mined for the three months ended June 30, by 10% to 1.54-million tons, owing mainly to production ramp-up at the Mupfuti mine and improved productivity at its other operations.
In addition, head grade of 3.27 g/t was 1% better than the prior quarter, reflecting marginally improved grade control at the mining operations.
Tons milled by the Impala Platinum subsidiary increased 8% from the previous quarter owing to increased ore supply, resulting in the metal-in-concentrate produced increasing by 9%.
The metal recovery rate, at 81.5%, was, however, marginally lower than the 81.8% realised in the first quarter of the year.
Metal-in-converter matte increased from 118 150 oz to 135 696 oz, mainly as a result of the increase in ore milled. In addition, the smelter ran consistently over the quarter, which cleared some excess inventory still in the system.
FALL OF GROUND
Post quarter-end, a major fall-of-ground incident was recorded at Zimplat’s Bimha mine, 150 km south-east of Harare, and, as a result, normal operations were suspended and all employees and machinery were withdrawn from the area.
“Crews from the affected mining areas have already been redeployed to other mining areas and portals,” the company said in a statement.
Throughput at the operation was planned at 6.2-million tons a year and the initial production loss estimate indicated a 9.5% reduction in tonnage throughput in the 2015 financial period and 3% lower in the following years.
“A full rock engineering analysis is under way to better understand the back area failure and, once this is completed, an updated set of mitigation measures will be communicated and implemented,” Zimplats noted.
Meanwhile, the Mupfuti mine development remained on schedule to reach design capacity in early 2015, with six production fleets at the mine following the introduction of two additional fleets this quarter.
“However, the attainment of the Phase II design capacity of 6.2-million tons a year for the entire operation will be impacted by the Bimha mine incident,” the group cautioned.
FINANCIAL PERFORMANCE
Looking to Zimplat’s financial performance for the three months, revenue increased by 21% from the prior quarter owing to a 14% increase in sales volumes, a 6% increase in gross revenue and a 26% increase in nickel prices.
“Consequently, operating profit increased 39% from the previous quarter to $50-million,” said the miner.
The cash cost an ounce was 15% lower than the prior quarter, owing largely to higher metal production.
The company’s local spend, excluding payments to government and related institutions, increased 25% to $63-million, while total payments to government – both in direct and indirect taxes – at $19-million, was marginally lower than the previous quarter’s $20-million.
GOVERNMENT DISCUSSIONS
Updating the market on its ongoing consultations with government, Zimplats said its operating subsidiary’s , Zimbabwe Platinum Mine’s, appeal against the levying of a penalty by the Zimbabwe Revenue Authority on the additional prior years’ income taxes had now been set down for hearing in the Special Court for Income Tax Appeals on September 24.
It added that the Zimbabwe government had initiated the process of taking over the Reserve Bank of Zimbabwe’s (RBZ) debt by issuing the Reserve Bank of Zimbabwe Debt Assumption Bill, which was published in the Zimbabwe Extraordinary Government Gazette on June 6.
The $34-million owed to Zimbabwe Platinum Mines by the RBZ was listed in the Bill’s schedule of prior debts.
“In terms of the Bill, prior debts will have to be validated and reconciled by the Ministry of Finance before being assumed by the State. The Bill will have to be passed by Parliament and assented to by the President for it to become law,” Zimplats outlined.
The company, meanwhile, remained engaged in discussions with the Minister of Youth Development, Indigenisation and Economic Empowerment with regard to Zimplats’ indigenisation implementation plan.
